NEW DELHI: The government has dialled Paytm and Oxigen Wallet to help digitise cash transactions in rural India. The rural development ministry wants to rope in digital wallet firms to make the Rs 40,000 crore turnover of women’s self-help groups (SHGs) cashless and broaden financial inclusion.

The ministry has tied up with banks to smoothen the transfer of money given through welfare schemes following the demonetisation of high-denomination currency notes.

Apart from scheduling special time slots for women beneficiaries and getting bank branch managers to travel to villages, the ministry is also warning villagers to stay away from “unscrupulous elements” in these times. The November 9 currency demonetisation has taken a toll on liquidity, especially in the rural areas.

“The private sector has shown a lot of enthusiasm for this exercise. Even they were not aware of the huge scope for such activities in rural areas,” a senior government official told ET.

The ministry has reached out to Paytm and Oxigen, the official said. The lack of banking facilities in remote rural areas has slowed down transactions and reduced transparency in the usage of loans given by banks through SHGs.

Banks have little or no visibility of the money they have lent since it is all given in cash. “Cash management is an issue…We want to create a doorstep facility with the help of these apps so that people do not have to go to a bank in a farflung area,” the official said.

There are 26 lakh SHGs in the country with 3 crore members. The loans are mobilised by bank ‘sakhis’ (rural women members of SHGs) who help in connecting borrowers with the banks arranging mortgages and disbursing loans. The government is also experimenting with mobile transfers to beneficiaries of the National Rural Employment Guarantee Scheme in several districts of Rajasthan.

The bank ‘sakhis’ in rural areas are being allowed to not just disburse money but also accept cash to be deposited. The ministry wants to expand the reach of these pilot projects to find ways of disbursing wages in areas where banks and ATMs are yet to reach.

“Last-mile connectivity is a big challenge …We are in talks with the department of financial services to help us try alternatives for ensuring access to money in rural areas,” another official said.

ET ViewEmpower Women This is welcome, and can foster economic empowerment of women. A World Bank report has said payments through an account can provide the on-ramp to financial inclusion and, in many cases, the first account a woman has under her control. Opening an account can be an important first step for introduction to the formal economy for an entrepreneur. It will bring down use of cash, lower costs and improve transparency.

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Rs 500 & Rs 1,000 notes scrapped: 10 points you should know

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Prime Minister Narendra Modi late on Tuesday announced demonetisation of Rs 1000 and Rs 500 notes with effect from midnight, making these notes invalid in a major assault on black money, fake currency and corruption.

Here are the 10 key points you should know:

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1) Currency notes of Rs 500 and Rs 1000 denominations will not be legal beginning November 9

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2) New notes of Rs 500 and Rs 2,000 would be released and circulated from the November 10.

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3) People can deposit notes of Rs 1000 and Rs 500 in their banks from November 10 till December 30, 2016.

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4) Those unable to deposit Rs 1000, Rs 500 notes by December 30 for some reason, can change them till March 31, 2017 by going to the branch of RBI and filling a declaration form.

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5) November 10-24, old notes worth Rs 4,000 can be exchanged per day. Post November 24, this limit will be increased

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6) The exchange can be done at any bank branch or post office upon showing your ID proof such as the Aadhaar card, Passport, Voter card, Ration card etc.

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7) Economic affairs secretary Shaktikanta Das also appealed that people may try to breach you with the old notes for an exchange, don't let them fool you. All the transactions made inside the bank will be recorded and monitored. In case you are carrying legal cash on behalf of your friends and family members, you can get it exchanged with showing a valid ID proof.

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8) Circulation of notes have incresed by 40% between 2011 and 2016. There has been an increase by 76% in Rs 500 alone and 109% in Rs 1,000 notes. During the same period, the economy has grown by 30%, which is highly dispropotionate, RBI said.

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9) RBI will issue certain guidelines on November 10 along the infusion of the new notes in the market

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10) Control rooms has been setup in Reserve Bank of India and Department of Economic Affairs. The numbers are 022-22602201, 022-22602944.

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